Troll Fighters: Article One Partners Raises $7M For Its Patent Research Platform

You won’t have to go far in Silicon Valley to find someone who will tell you that the patent situation in the tech industry is a mess. While trouble has been brewing for a decade, the last year has been marked by a continuous stream of litigation, and some might say it’s beginning to take its toll on innovation. Take Yahoo’s recent threats to Facebook, for example. Back in September, Google Chairman Eric Schmidt warned that “overbroad patents will slow” the progress of the software industry, saying that the current state of patents in the U.S. was “terrible.”

At the time, Schmidt suggested that dealing with patents in a way that is more systematic might be beneficial to the industry, even broadly making reference to the idea of crowdsourcing. The Google Chairman isn’t alone in thinking this approach could help make a difference in the ongoing patent wars, evidenced by the growing community that is Article One Partners’ global patent research platform.

Founded in 2008 by inventor and entrepreneur, CEO Cheryl Milone, Article One Partners has become one of the world’s largest patent research communities, distributing requests for prior art research to more than one million scientists and technologists using a global, human-fueled search engine. Basically, the startup has built a global research community of patent experts that respond to requests from individuals or corporations, taking those requests and building reports aimed at enabling the company to make better patent-related business decisions.

The community is incentivized by monetary rewards, and researchers can earn between $5K and $50K for top-notch research on each project. Article One also offers $100 prizes for the most valuable submissions on each project, and allows researchers to participate in its profit-sharing program by earning points based on their involvement and activity in projects on the site.

Again, the idea is to leverage its 18,000-plus scientists and technologists to deliver obscure and hard-to-find patent and IP research to its clients, which includes 16 Fortune 100 companies, and 7 of the top 10 U.S. patent filers. Companies can then use this research to assess their patent portfolios, decrease litigation costs, and limit risks when developing new technologies.

It’s a unique approach to the “spaghetti plate” mess that is bogging down the industry, and one that continues to be appealing to investors. In 2009, General Catalyst Partners invested $3 million in Article One, and today the startup is announcing that it has raised $7 million in institutional funding from Alleghany Capital Corporation. This marks the second round of institutional funding by Alleghany, which invested $5 million in 2010, bringing the startup’s total funding to over $15 million.

Article Partners CEO Cherly Milone said that the company will use the new funding to drive “go-to-market activities” and help meet the demand of current and future clients, as well as expand (and compensate) its growing community of patent researchers, which more than doubled in size in 2011.

Obviously, there’s been some big patent activity in the last year, with Apple/Microsoft/RIM doing a deal to acquire Nortel’s $4.5 billion patent portfolio, and Google purchasing Motorola Mobility’s portfolio for $12.5 billion, but there’s also been a lot of patent trolling and disappointing litigation. To address this, Article One recently launched a “Litigation Avoidance” service that collects relevant information about prior art, focusing on pre-emptive action around specific patents to help identify and eliminate patents that don’t deserve protection. And guess who the first member of this program is? Microsoft.

It’s an interesting solution, because it’s clear even to those not intimately involved with patent and IP legislation that prior art and documented evidence of invention are to be found all over the world, but since there’s not one aggregated, easily searchable global source, crowdsourcing and a global community of experts can be an effective way to solve the problem.